Rio Tinto rises in U.K. trade, but BSkyB falls

U.K. officials reportedly stepping up Barclays probe

LONDON (MarketWatch) — Miners were among the best performers in the U.K. stock market Monday, helping to lift the benchmark FTSE 100 index, but British Sky Broadcasting Group PLC shares dropped as the media firm sought control of pay-TV assets in Germany and Italy.

Investors appeared to set aside weekend developments in Ukraine likely to increase tensions between Kiev and Moscow. Pro-Russian separatists declared victory in a Sunday referendum on succession in the eastern regions of Donetsk and Luhansk, and the Russian government said it wants a “civilized implementation” of the results. But Ukrainian and European Union officials dismissed the votes as illegitimate.

Banks, insurers and consumer discretionary issues strengthened in U.K. trade, but the groups were outpaced by gains in the mining sector after J.P. Morgan Cazenove raised its view of miners to overweight from underweight. The second half of 2014 is likely to “see the sector’s free-cash-flow improvement, capital-returns potential and attractive relative valuation begin to be appreciated more fully,” wrote J.P. Morgan analyst Fraser Jamieson.

Rio Tinto PLC
RIO, -0.77%RIO, -2.03%RIO, -0.66%
was the best performer on the FTSE 100, rising 4.8% as J.P. Morgan named the iron-ore heavyweight as its top pick among miners.

Reuters

Rio Tinto itself is poised to generate an estimated free cash flow of 9% in 2015, “among the highest across the market, and be in a position to augment a ~4% dividend yield with additional returns of capital,” said J.P. Morgan.

Pfizer said five-year commitments to the U.K. — including one to keep a fifth of the merged company’s R&D workers in the country — were “legally binding.” AstraZeneca has rejected Pfizer’s bid of £50 a share ($84.45).

Barclays PLC
BARC, -1.74%BCS, -2.62%
fell 1.4% following a Financial Times report on Sunday that Britain’s fraud office was stepping up its investigation into the bank’s dealings with Qatar in 2008. Former chief executive Bob Diamond and other senior members of the bank’s former management are expected to be questioned, said the report.

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